Better competitor

The recent analysis of the competitiveness of Polish industry made by the Center for Social and Economic Research (CASE), shows that it increased dramatically between 2000 and 2003 and is experiencing further growth, as are the quality of Poland's products and the country's export share in EU markets. The relative unit labor cost (RULC) is also decreasing.

Most sectors of the Polish processing industry increased their share of the EU's markets.

"In terms of progress made, export-led industries were the stars of Polish manufacturing. Their distinguishing feature was a large increase in productivity, a fall in RULC, the highest level of investment rate and its lowest drop," says Anna Wziątek-Kubiak, author of the analysis.

According to CASE, the growth of competitiveness resulted from a jump in labor efficiency in Poland which outpaced that of other EU countries, as well as a higher growth of efficiency over wages. Differences in competitiveness between sectors directly influenced the structural changes within the processing industry. The disparities stimulated a boom in one sector and hampered another, which had an impact on employment.

CASE also examined the influence of the government's policy on industry competitiveness. Maintaining state property and subsidizing state companies and tax burdens had a negative impact on both the domestic and EU markets. "The greater share the state has in the economy, the weaker competitiveness in the market is," says CASE's Ewa Balcerowicz.

According to the report, economic growth, structural changes and the unemployment rate in the coming years will be dependent on FDI dynamics, innovation and the ability to take advantage of the EU funds.